Bona Fide Conglomerate, Inc. v. SourceAmerica et al

Filing 346

ORDER Granting in Part and Denying in Part Defendant SourceAmerica's 337 Ex Parte Application for Protective Order. Signed by Magistrate Judge David H. Bartick on 10/3/16. (dlg)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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BONA FIDE CONGLOMERATE, INC.,

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Plaintiff,

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v.

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SOURCEAMERICA, et al. ,

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Defendants.

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Case No.: 14cv751-GPC (DHB)
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT
SOURCEAMERICA'S EX PARTE
APPLICATION FOR PROTECTIVE
ORDER
[ECF No. 337]

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On August 19, 2016, Defendant SourceAmerica ("SourceAmerica") filed an Ex

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Parte Application for Protective Order. (ECF No. 337.) On August 31, 2016, Plaintiff

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Bona Fide Conglomerate, Inc. ("Plaintiff') filed a response. (ECF No. 340.) Having

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considered the parties' submissions, the Court hereby GRANTS in part and DENIES in

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part, SourceAmerica's motion.

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I. BACKGROUND

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On February 17,2016, the Court issued a Report and Recommendation regarding

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Defendant's Ex Parte Motion (1) to Disqualify Plaintiffs Counsel, (2) to Revoke Pro Hac

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Vice Admission of Daniel J. Cragg, (3) for Protective Order, and (4) for Expedited

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Discovery. (ECF No. 288.) The Court found Plaintiffs counsel, Daniel Cragg ("Cragg")

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had violated his ethical duties with regard to the Robinson Tapes, and recommended the

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remedy of evidence exclusion over disqualification_ (ld at 13-17 _ Both parties objected
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to the Report and Recommendation_ (ECF Nos_ 298, 299_)

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On August 16,2016, Judge Curiel issued an Order Adopting in Part and Declining

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to Adopt in Part Magistrate Judge's Report and Recommendation_ (ECF No_ 336_) Judge

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Curiel determined the eight excerpts from the Robinson lapes at issue were privileged, that

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the privilege had not been waived, and that Cragg violated his ethical duties in his handling

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of the Robinson tapes_ (ld.) However, Judge Curiel found the remedy of exclusion of

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evidence was insufficient Therefore, he disqualified Cragg and his law firm, Eckland and

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Blando LLP_ (/d.) Judge Curiel also denied SourceAmerica' s motion for a protective order

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without prejudice, indicating SourceAmerica could "refile a motion for a protective order

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with the Magistrate Judge in light of this Court's order."

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SourceAmerica filed the instant motion_

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(ld at 25_)

Therefore,

II. DISCUSSION

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SourceAmerica requests the Court enter a protective order (1) requmng that

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Plaintiff, its disqualified attorneys from the law firm Eckland & Blando LLP, and

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Counterdefendant Ruben Lopez ("Counterdefendant") return all of SourceAmerica's

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privileged information within five (5) court days after entry of the order; (2) requiring that

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Plaintiff, its disqualified attorneys, and Counterdefendant identify all persons to whom they

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have disclosed SourceAmerica' s privileged information; (3) precluding any use or

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dissemination of SourceAmerica's privileged information, including to new and local

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counsel; (4) requiring that new counsel and local counsel file a declaration attesting that

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they have not received any of Source America's privileged information; and (5) precluding

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Plaintiff, Counterdefendant, new counsel , and local counsel from using the privileged

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excerpts in its case in chief SourceAmerica argues the requested protective order is needed

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to implement Judge Curiel's order and prevent Plaintiffs new counselor local counsel

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from using the improperly retained confidential information in the future_

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Plaintiff opposes the request

Plaintiff indicates it intends to pursue a writ of

mandamus with the Ninth Circuit, and therefore argues it must have continued access to
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SourceAmerica's privileged information in order to create a record for the writ petition.
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Plaintiff also asserts that it is impossible and impractical to return the eight privileged

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excerpts to SourceAmerica.

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protective order: (1) Plaintiff will identifY all persons to whom disclosure was made; (2)

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Plaintiff will not use the privileged information in its case in chief, unless SourceAmerica

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puts the eight excerpts into issue; and (3) Plaintiffs present and future counsel will not

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disseminate the privileged information to any third parties. Plaintiff asks the Court to

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permit its present and future counsel to retain and review the privileged information, for

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purposes of appealing the disqualification order. Plaintiff also requests that its appellant

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counsel be permitted access to all sealed documents that were filed in connection with the

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disqualification motion.

Therefore, Plaintiff proposes the following alternative

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Rule 26 authorizes the Court, upon a showing of good cause, to issue a protective

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order to "protect a party or person from annoyance, embarrassment, oppression, or undue

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burden or expense." Fed. R. Civ. P. 26(c)(1). The party seeking a protective order bears

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the burden of establishing good cause. Rivera v. NIBCO, Inc., 384 F.3d 822, 827 (9th Cir.

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2004). '''Good cause' is established where it is specifically demonstrated that disclosure

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will cause a 'specific prejudice or harm.'" Id. (citing Phillips ex rei. Estates of Byrd v.

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Gen. Molars Corp., 307 F.3d 1206, 1211 (9th Cir. 2002)). District courts have "broad

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discretion ... to decide when a protective order is appropriate and what degree of protection

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is required." Phillips, 307 F .3d at 1211 (quoting Seattle Times Co. v. Rhinehart, 467 U.S.

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20, 36 (1984)).

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Here, the Court finds there is good cause for a protective order in light of Judge

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Curiel's determination that disqualification of Cragg and his law firm was necessary to

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prevent prejudice to SoureAmerica. In determining the proper scope of the protective

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order, the Court must balance SourceAmerica' s interests its privileged information with

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Plaintiffs interests in pursuing an appeal of Judge Curiel's disqualification order. On

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balance, the Court finds it is appropriate to place restrictions on the use and dissemination

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of the privileged information, and to require the information to ultimately be returned to
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SourceAmerica. However, in light of Plaintiffs indication that it plans to appeal, the Court
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finds it is necessary to allow Plaintiff continued access to the privileged information for a

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limited time and for the limited purpose of pursuing an appeal. Accordingly, the Court

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adopts SourceAmerica's proposed protective order, with the modifications as set forth and

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Plaintiff, its disqualified attorneys from the law firm Eckland & Blando

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LLP, and Counterdefendant Ruben Lopez shall return all of SourceAmerica's

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privileged information within five (5) court days after entry of this order. Plaintiff's

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current local counsel from the law firm Wright, L'Estrange & Ergasto and any new

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counsel retained after August 16, 2016 to represent Plaintiff on appeal, shall return

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all of SourceAmerica 's privileged information within five (5) court days after either:

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(1) the expiration ofthe time to file an appeal, or (2) the date the appeal is taken under

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submission by the Ninth Circuit following the conclusion of oral arguments.

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Plaintiff argues returning SourceAmerica' s confidential information is not practical.

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The Court understands Plaintiffs concerns, but nevertheless finds the privileged

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information must be returned. The Court will not require Plaintiff to attempt to "excise"

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the privileged information from the Court record. The Court record will remain intact, and

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the privileged information will remain under seal. However, Plaintiff, its disqualified

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counsel, and Ruben Lopez must return to SourceArnerica all originals and any copies of

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the audio recordings and transcripts that contain the eight privileged excerpts of the

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Robinson Tapes that were identified in the Court's February 17, 2016 Report and

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Recommendation. (See ECF No. 288 at 10.) Plaintiff, its disqualified counsel, and Ruben

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Lopez are permitted to retain redacted copies of the audio recordings and transcripts, as

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well as any redacted and lor publicly filed versions of any document or order that has been

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filed in this case.

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The Court will not require Plaintiffs current local counsel, or new counsel retained

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to represent Plaintiff on appeal, to return the confidential information to SourceAmerica

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until after the time to file an appeal has expired, or the appeal of Judge Cureil' s
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1 disqualification order is taken under submission by the Ninth Circuit. This will allow
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Plaintiffs counsel to create a record for the writ petition. However, once the writ is under

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submission, or in the event Plaintiff decides not to file a writ, there will no longer be a need

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for Plaintiffs counsel to have access to the privileged information. Therefore, at that point,

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the information must be returned to SourceAmerica.

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2.

Plaintiff, its disqualified attorneys from the law firm Eckland & Blando

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LLP, its current local counsel from the law firm Wright, L'Estrange & Ergastolo, any

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counsel retained after August 16,2016 to represent Plaintiff, and Counterdefendant

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Ruben Lopez shall identify all persons to whom they have disclosed SourceAmerica's

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privileged information.

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The court finds it is appropriate for Plaintiff, its disqualified attorneys, its current

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and any new counsel, and Ruben Lopez to identify all persons to whom disclosures of the

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eight excerpts have been made. Plaintiff has agreed to provide this information, and has

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filed declarations from Daniell. Cragg, Joseph T. Ergastolo, and Ruben Lopez. See ECF

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No. 340-1 , 340-2, and 34-3. Therefore, it appears Plaintiff has complied with this portion

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of the Protective Order. To the extent, Plaintiff has retained new counsel since the date of

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Judge Curiel's disqualification order, new counsel shall also provide this information to

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SourceAmerica.

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3.

Plaintiff, its disqualified attorneys from the law firm EckJand & Blando

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LLP, its current local counsel from the law firm Wright, L'Estrange & Ergastolo, any

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counsel retained after August 16, 2016 to represent Plaintiff, and Counterdefendant

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Ruben Lopez are precluded from using or disseminating SourceAmerica's privileged

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information, with the exception that the attorney designated lead counsel for purposes

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of appealing Judge Curiel's disqualification order may use the privileged information

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for purposes of the appeal only. Plaintiff shall file a declaration indicating which

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counsel has been designated lead counsel for the appeal.

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The Court finds that Plaintiff, its attorneys, including its disqualified counsel, current

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local counsel, and any new counsel, should not be permitted to use or disseminate the eight
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excerpts, with one exception. The Court recognizes that Plaintiffs counsel should be

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allowed to use the information for the limited purpose of appealing Judge Curiel's

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disqualification order.

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responsible for preparing the writ petition on its behalf. Plaintiff indicates it might use

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local counsel , or it might hire new counsel for the appeal. Therefore, Plaintiff shall provide

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a declaration indicating which attorney has been designated as lead counsel for purposes

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of the appeal. The attorney designated lead counsel for the appeal, is permitted to review

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the privileged information, including any documents that were placed under seal in

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connection with the disqualification motion. No other attorney for Plaintiff may use or

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disseminate the confidential information without express written consent of the Court.

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Further, the confidential information may not be used or disseminated for any purpose

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other than to appeal Judge Curiel's August 16, 2016 disqualification order.

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However, Plaintiff has not identified which counsel will be

Any counsel retained after August 16, 2016 to represent Plaintiff for

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purposes other than the appeal of Judge Curiel's disqualification order shall file a

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declaration attesting they have not received any of SourceAmerica's privileged

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information.

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The Court finds it is appropriate to require any new counsel retained after August

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16, 2016, for purposes other than to appeal the disqualification order, to file a declaration

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attesting to whether counsel has received SourceAmerica's privileged information.

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Although the Court has determined Plaintiffs appellate counsel should be permitted

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limited access to the privileged information, any new counsel retained to represent Plaintiff

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in this action for other purposes should not review the privileged information.

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5.

Plaintiff, its current local counsel from the law firm Wright, L'Estrange

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& Ergastolo, any counsel retained after August 16, 2016 to represent Plaintiff, and

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Counterdefendant Ruben Lopez are precluded from using SourceAmerica's

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privileged information in its case in chief.

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Plaintiff indicates it does not oppose a protective order precluding the use of the

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privileged information in its case in chief. Accordingly, the Court finds Plaintiff, its current
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local counsel, any new counsel retained after August 16, 2016, and Counterdefendant

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Ruben Lopez will be precluded from using SourceAmerica's privileged infonnation in its

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case in chief, including using the information as evidence at trial, at any hearing, on any

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motion, or in discovery, unless SourceAmerica uses the privileged information in support

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of its counterclaim.

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III. CONCLUSION

For the foregoing reasons, SourceAmerica's Ex Parte Application for Protective
Order is GRANTED in part and DENIED in part, as set forth above.
IT IS SO ORDERED.
Dated:

lob //{;

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